Qinlang and Xin & Ors

[2020] FamCA 702

FAMILY COURT OF AUSTRALIA

QINLANG & XIN AND ORS [2020] FamCA 702

FAMILY LAW – COSTS – Where the wife seeks a costs order against the husband – where in the alternative, the wife seeks a costs order against the second and third respondents – where the husband was wholly unsuccessful in particular applications – Husband’s conduct in relation to the proceedings

Family Law Act 1975 (Cth) ss 102Q, 117
Family Law Rules 2004 (Cth) r 19.04

Collins & Collins (1985) FLC 91-603

Fitzgerald and Fish (2005) 33 FamLR 123

Penfold v Penfold (1980) 144 CLR 311

Renald & Renald (Costs) (2018) FLC 93-819

SCVG & KLD [2015] FamCA 687

APPLICANT: Ms Qinlang

1st RESPONDENT: Mr Xin

2nd RESPONDENT: Mr B Xin

3rd RESPONDENT: Ms Wang

FILE NUMBER: CAC 1782 of 2018

DATE DELIVERED: 26 August 2020

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Gill J

HEARING DATE: 20 August 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr J Haddock

SOLICITOR FOR THE APPLICANT: Dobinson Davey Clifford Simpson

SOLICITOR FOR THE 1ST RESPONDENT: Hijazi Curran Cameron Lawyers

SOLICITOR FOR THE 2ND AND 3RD 

RESPONDENTS

Farrar Gesini Dunn

Orders

(1)That pursuant to Section 117(2) of the Family Law Act 1975 (Cth) ("the Act"), the First Respondent pay half of the Applicant's costs of, and incidental to, her Response to an Application in a Case filed 15 May 2020, as agreed or taxed.

(2)That pursuant to Section 117(2) of the Act, the First Respondent pay the Applicant's costs of, an incidental to, the Application in a Case filed by the First Respondent on 28 May 2020, as agreed or taxed.

(3)Should a party pursue costs in respect of this costs determination, then that party is to file written submissions within 14 days of the making of these orders in support of such. 

(4)If no party files in accordance with the immediately preceding order, application for the costs of the costs proceedings will be taken to have not been pressed and will be dismissed. 

(5)Should submissions be filed in accordance with Order 3 above, then any party resisting costs will be required to file written submissions in response within a further 14 days.

(6)The costs of the costs proceedings will then be determined on the basis of those written submissions, in chambers, unless a party or the Court notifies that further oral address is required.

(7)The proceedings are otherwise transferred to the Registrar’s list pending further application or the listing of the matter for making trial directions.

(8)The next time the matter is listed either before the Registrar or the Court is a designated a court event for the notification of costs pursuant to Rule 19.04.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Xin & Qinlang has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: CAC 1782 of 2018

Mr Xin

Applicant

And

Ms Qinlang

Respondent

And

Mr B Xin

2^nd Respondent

And

MsWang

3^rd Respondent

REASONS FOR JUDGMENT

1. These proceedings concern costs applications, primarily by the Wife, following various interlocutory proceedings concerning the sale of one of the Husband’s and Wife’s properties in order to support their business concerns.  Those proceedings followed similar proceedings in the Federal Circuit Court, after which the Second and Third Respondents (the Husband’s parents) intervened to set aside a prior order for the sale of property.

2. Specifically, the Wife seeks costs against the Husband (or in the alternative against the Husband’s parents) in relation to her response to an application in a case filed 15 May 2020.  In that application, the Wife sought the dismissal of the Husband’s parents’ Application in a Case which sought to set aside the decision of the Federal Circuit Court which provided for the sale of a property in Suburb K, in the Australian Capital Territory.  The Wife was unsuccessful in resisting this application.  The Wife also sought, in the alternative, that a property in Suburb E be substituted for the Suburb K property.  She was successful in this.

3. The Wife also seeks that the Husband pay the Wife’s costs in relation to his application of 28 May 2020.  That involved an application in which the Husband sought a stay of the above orders of 22 May 2020 for the sale of the Suburb E property pending appeal.  The Husband was wholly unsuccessful in relation to this application and subsequently withdrew his appeal.

4. Finally, the Wife sought that the Husband pay her costs of the costs application, or, in the alternative, that the Husband’s parents pay those costs.

5. The Husband sought that the Wife’s applications be dismissed or alternatively be reserved. 

6. The Husband’s parents sought that the Wife pay the costs of her costs application.

Material relied upon

1. The Wife relied upon:

   a)Application in a Case filed 19 June 2020; and

   b)Affidavit filed 19 June 2020.

2. The Husband relied upon:

   a)Response to Application in a Case filed 14 July 2020;

   b)Affidavit of Mr Xin filed 14 July 2020; and

   c)Earlier affidavit filed before Judge Hughes.

3. The Second and Third Respondents relied upon:

   a)Response to Application in a Case filed 16 July 2020; and

   b)Affidavit of Mr B Xin and Ms Wang filed 16 July 2020.

Principles

1. The general rule, provided by s 117 of the Family Law Act 1975, is that each party to proceedings will bear his or her own costs unless, having regard to the matters identified at s 117(2A), circumstances justify the making of a costs order.

2. These provisions were dealt with by the High Court in Penfold v Penfold[1] where the plurality said:

   It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

   Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in “a clear case”.

   Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v. Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.

   [1] (1980) 144 CLR 311.

3. In SCVG & KLD, Cronin J emphasised the statements in Collins & Collins that the s 117 discretion is broad and that the factors within s 117(2A) are not to be read restrictively.[2]  Cronin J also cited Fitzgerald and Fish (200) 33 FamLR 123 which noted that any one (or more than one) of the factors set out in s 117(2A) may form the foundation for a costs order. [3]  

   [2]SCVG & KLD [2015] FamCA 687 [22]-[23]; Collins & Collins (1985) FLC 91-603 [18].

   [3]Fitzgerald and Fish (2005) 33 FamLR 123 [18].

4. Section 117(2A) is in the following terms:

   In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (a)      the financial circumstances of each of the parties to the proceedings;

   (b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

   (d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

   (e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   (f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   (g)      such other matters as the court considers relevant

The response to an application in a case of 15 May 2020

1. The Wife relied upon a suite of factors in support of her applications.

2. The first matter that the Wife relied upon was the financial circumstances of the parties.  Her affidavit set out difficult financial circumstances, in particular, a lack of child support payments while she carries the support of the children.  The Wife, due to the impact of COVID-19 on the business interests that fund her living expenses, is drawing less for expenses than provided for under previous orders.

3. Although her claim of harsh financial circumstances was somewhat undermined by her acquisition of a luxury vehicle, the Wife’s difficult financial circumstances are a factor in support of her costs application.

4. The Husband’s financial circumstances are set out in his financial statement filed 14 July 2020.  His financial circumstances, as depicted by that statement, are even more difficult than those of the Wife.  This is a matter that points away from a costs order being made against him although, as pointed out by counsel for the Wife, this does not act as a bar against the making of a costs order.

5. The Wife also relied upon the conduct of the parties in relation to the proceedings.  She relied on prior breach of orders in relation to payments of monies by the Husband, the Husband failing to agree to defer the business loan, the Husband initially describing as a “loan” monies advanced by his parents for the Suburb K property, then 19 months later asserting that the monies were not provided as a loan (there being an underlying dispute in the proceedings as to whether the Suburb K property is held on trust for the Husband’s parents), and also pointing to conduct post the orders for the Suburb E apartment, leaving the apartment in a damaged and dirty condition.

6. When queried as to whether these claims fell within the scope of “in relation to the proceedings”, counsel for the Wife pointed to the breadth of the meaning of “proceedings” as set out at s 102Q.  However, it should be observed that the definition at s 102Q is in relation to Part XIB as it relates to vexatious proceedings, not Part XV which contains the provisions in relation to costs.

7. Even if “proceedings” was to be given a broad understanding, the solicitor for the Husband pointed to the conduct being in relation to “similar matters” to pleadings, particulars, etc.

8. Section 117(2A)(c) requires careful examination. It identifies the relevant conduct being in relation to the proceedings. It is not concerned with blameworthy behaviour outside of that description. Although expressed as without limiting “in relation to the proceedings”, the list that thereafter follows is consistent with the notion that “in relation to the proceedings” is concerned with the manner of the conduct of the litigation.

9. In Renald & Renald (Costs),[4] the Full Court constituted by Thackray J observed in relation to this paragraph that:

   Although it was conceded that the father’s conduct in retaining the two children after a visit was ‘reprehensible’, I am not satisfied that this is a relevant factor in determining the costs of the appeal. Specific provision is made in s 117(2A) for the court to consider issues of ‘conduct’, but the conduct must be ‘in relation to the proceedings’ and is directed at conduct as a litigant. While I accept that a party’s conduct as a parent and their conduct as a litigant may be ‘intertwined’ (Prantage v Prantage (2013) 49 Fam LR 197 at [104]), arguably this is more so the case in proceedings at first instance than appeal proceedings.

   [4]Renald & Renald (Costs) (2018) FLC 93-819 [18].

10. Examples of conduct which may contribute to a costs order including providing misleading or false evidence, particularly where this incurs additional expense and time to disprove the matters, as per Penfold and Penfold,[5] or pursuing issues that are unsuccessful and waste time, for example by unreasonably searching for assets that the other party has supposedly hidden, as per Rouse & Rouse.[6]

    [5]Penfold and Penfold (1980) FLC ¶90-800.

    [6]Rouse and Rouse (1981) FLC ¶91-073.

11. That is, the paragraph is specifically concerned with the manner of the conduct of the proceedings, rather than conduct in a more general sense.  Of the matters identified by the Wife in relation to this paragraph the matter that bears weight under this paragraph is the description of his parents as having provided a loan, rather than his current position (that emerged after Judge Hughes had made interlocutory orders for the sale of the Suburb K property) that the purchase of the Suburb K property was on behalf of his parents. The emergence of this factual contention was what led to the fresh proceedings initiated by the Husband’s parents to set aside the orders of Judge Hughes and the corresponding application by the Wife to substitute an order for the sale of the Suburb E property in lieu of the sale of the Suburb K property.

12. Under those circumstances, the Husband should bear responsibility for the Wife’s costs of her response to an application in a case of 15 May 2020 insofar as they were incurred in relation to the substitution of the Suburb E property for the Suburb K property.  This will be taken to be half of the costs of the response to an application in a case.

13. In the event that the Wife did not receive her full costs in relation to that application, she sought that the Husband’s parents meet her costs.  Following the above determination that would involve the Husband’s parents meeting the Wife’s costs in relation to their application to discharge the orders in relation to the sale of the Suburb K property.

14. In that respect the Wife, after acknowledging the Husband’s parents complete success in that aspect, relied upon their conduct ion relation to the proceedings, specifically that they took no steps for a period of two months following the making of the orders by Judge Hughes, following which they made an urgent application to discharge the Suburb K order.  However, those orders of 24 February 2020 provided for the sale of the Suburb K property only in the event that the parties were unable by 30 April 2020 to agree an alternate source of funding for the business expenses.  On 1 May 2020 they made their application to join the proceedings.

15. The Wife also asserted that the pleadings identifying the equitable claims made by the Husband’s parents lacked clarity.  However, I do not consider that they were so lacking in clarity as to play a significant role in relation to costs.

16. Under those circumstances, I am not prepared to find that there is a sufficient justification to depart from each party bearing his or her own costs on relation to the balance of the application of 15 May 2020.

The application of 28 May 2020

1. This application by the Husband sought a stay of the orders in relation to the sale of the Suburb E property pending the Husband’s appeal of those orders.  The Husband was wholly unsuccessful in this application.  He has since discontinued the appeal.

2. Against this, the Husband pointed to there being nothing improper or unreasonable in the application for a stay, noting that it was not found that there was a lack of bona fides in his application.

3. On balance, the Husband’s application being wholly unsuccessful is sufficient in this instance to depart from the starting position that each party should bear his or her own costs.

The costs of the costs application

1. Given that the results of this costs application were unknown, the parties did not address me directly about this aspect.

2. Should a party pursue costs, then it will be necessary for that party to file written submissions within 14 days of the making of these orders in support of such.  If no party does so, the costs aspect of the interlocutory applications will be taken to have not been pressed.  Should such submissions be filed, then any party resisting costs will be required to file written submissions in response within a further 14 days.  The matter will then be determined on the basis of those written submissions in chambers unless notified that further oral address is required.

Other

1. The next time the matter is listed either before the Registrar or the Court will be designated a court event for the notification of costs pursuant to Rule 19.04.

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 26 August 2020.

Associate: 

Date:  26 August 2020

Annexure 1

Orders Sought by the Respondent Wife

1. That pursuant to Section 117(2) of the Family Law Act 1975 (Cth) ("the Act"), the First Respondent pay the Applicant's costs of, and incidental to, her Response to an Application in a Case filed 15 May 2020, as agreed or taxed.

2. That in the alternative to Paragraph 1 above, the Second and Third Respondents pay the Applicant's costs of, and incidental to, her Response to an Application in a Case filed 15 May 2020, as agreed or taxed.

3. That pursuant to Section 117(2) of the Act, the First Respondent pay the Applicant's costs of, an incidental to, the Application in a Case filed by the First Respondent on 28 may 2020, as agreed or taxed.

4. The First Respondent (and/or in the alternative, Second and Third Respondents) pay the Applicant’s costs of this application.

Orders Sought by the Applicant Husband

1. That the Application in a Case relating to Costs, filed by the Respondent Wife.

2. In the alternative costs be reserved.

Orders Sought by the Second and Third Respondent

1. That Order 2 of the Application in a Case relating to Costs, filed by the Respondent Wife in the substantive proceedings (“the Respondent Wife”) on 19 June 2020 be dismissed.

2. That the Respondent Wife pay the Second and Third Respondents’ (in the substantive proceedings) costs of and incidental to, the Application in a Case filed by the Respondent Wife on 19 June 2020.